Determine the present worth of the total cost

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In a new, highly automated factory, labor costs are expected to decrease at an annual rate of 5%; material costs will increase at an annual rate of 4%; over-head costs will increase at 8%. The labor, material, and overhead costs at the end of the first year are $2 million, $3 million, and $1.6 million, respectively. the time value of money rate is 8% and the time horizon is seven years. Determine the present worth of the total cost.

Reference no: EM13999859

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